Stuttgart Investment Market S1-2022

In the second quarter 2022, only €120m were invested on the Stuttgart Property Market, i.e. around 60% less than in the same quarter of 2021. Together with the first quarter, a total transaction volume of approx. €650m can be reported for S1-2022. This result actually exceeds the previous year by around €90m, but has be largely been due to a one-off effect, as the latest market research by E & G Real Estate shows.

The year started calmly into its first quarter. Without the the one-off effect created by the takeover of the majority of shares of alstria office REIT-AG by Brookfield Asset Management it would have been even weaker. Due to rising interest rates and the corresponding market uncertainties, the transaction volume reached a historical low in the second quarter. Many buyers remain reluctant to invest in face of rising interests and geopolitical challenges. While investors are re-assessing the current situation, their investment decisions are put on hold. At the same time, they have annual investment targets to meet. Therefore, investment dynamics can be expected to pick up again in the second half of the year,“ says Björn Holzwarth, Managing Partner of E & G Real Estate GmbH.

All in all, only 15 transactions were concluded in the first half-year of 2022. Investors focussed mainly on Office Property, which accounted for 75% of the transaction volume. Mixed-Use Property and Hotels followed with a market share of ca. 12% each.

With a 63% share in transaction volume, fund managers were the most active buyer group in the first half-year of 2022. Further significant market share was generated by Open-ended Real Estate Funds/ German Special Funds accounting for 16%, as well as by Corporates with 11% of the transaction volume.

On the vendor side, Listed Real Estate Investment AG’s/REITs dominated the market with a share of 73% in transaction volume. Private Owners and Project Developers followed with approx. 11% market share each. All other market participants played only a marginal role.

„Due to current uncertainties regarding interest rates and the corresponding reluctance of investors, it remains challenging to give an accurate estimation for the year 2022,“ says Mr. Holzwarth. „On the basis of current investment activities on the Stuttgart Property Market, it needs to be assumed that the transaction volume of the previous year will not be achieved. Any forecast must therefore be adjusted accordingly. At present, E & G Real Estate project a transaction volume of 1.2 billion euros by the end of the year.“

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